ARTAX
by Jack Moore, CA
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A TALE OF TAXES
Once upon a time, taxes were extracted from the people for the sole purpose
of running the country. That has changed.
The Canadian government imposed income taxes on the people and their corporations
during the first World War. The reason was to raise money to pay for the
war effort. At the time of implementation, it was promised to last for only
five years. We still have it with us.
Politicians, then as now, were generally ignored when they spoke. The reasons
have not changed: their words do not mean anything. However, they suddenly
had all this money to spend.
Money is meaningful. It makes a lot of noise; it is not rhetorical; people
pay attention to it and will even go to some effort to obtain some of it.
It is the exchange medium to convert our labour into goods and services
produced by others.
The politicians did not have to chase and cater to the public any longer.
The public wanted some of that pot full of gold and, since it was their
gold, they deserved it. But the dispenser learned that he could curry favour
by influencing how big a handful anyone got from the pot.
And that brings us to the power of the politicians in the money distribution
system and policies in our country.
Most of us have heard the expressions: history repeats itself; the economic
depression of the thirties was a time of human terror; man lives by labour
alone; and the cheque is in the mail. They are all true, but on any given
day society does not wish to think or talk about them. They cause tremors.
Some years ago one of our most famous prime ministers, one who had inherited
great wealth and had never really worked in his life, told the people of
Canada that this country was so rich that those who did not wish to work
or who wanted to work just a little bit could so do, and the rest of us
would support them. This pronouncement and its subsequent effect raised
the power of the distributor of the gold in the pot to the ultimate extreme:
when the pot ran dry they used other peoples' money. They borrowed from
anyone who would lend to them.
Boy, did we feel good. This was the accepted way in the broad western world
(and some parts of Europe). The politicians and their bureaucrats were essentially
dictators but full of benevolence. Their power was self-fulfilling.
Then one day, the people who were putting into the pot woke up. They found
that not only was there very little left in the pot for them, but they also
had to pay back that which had been borrowed. So, the pendulum had swung
to the other side of the middle road, and those with their hands in the
pot had to justify their position, each on his own.
And that brings us to the horrible dilemma that the art community has with
regard to the people (read the rest of society). It must learn the aspects
of doing on their own and accept that ART is a business and must be approached
as such.
Our structure for carrying on business is either as a proprietor (partner)
or as a company (corporation). There is very little difference in the comparative
income tax cost, at a relatively modest activity level, between the two.
The bottom line is how much money is left in one's pocket at the end of
the day after paying all the cost (expenses) of doing business, and that
includes paying income taxes on the profits. The main difference between
the two is that the company limits the owner's liability to others for damage
caused by the product or service provided. The same protection may be obtained
through any good general insurance broker. It is called third party liability
coverage.
The records that must be maintained to compute periodic profit or loss are
the same for both structures. The annual preparation of financial information
and necessary government returns is more complicated and expensive for the
company.
Future articles will deal with: the tax department; records needed and how
to do them; advisors; financing; insurance; and hiring people.
Being a bit of business person is not such a big deal. It is a requirement
and a fact of life for most of us. The easiest way to get to it is to accept
that the pot is nearly dry and we must all make our own way in this new
world.
Take responsibility for your own actions and life will be far more rewarding.
